More capitalist exploitation

This is a story in my occasional series from the wilds of wicked capitalist investment in the developing world. Before I begin, I'd like to advertise the DEC's Kenya appeal (donate here). We probably all have various views about why East Africa suffers famines regularly and how this could be made a less frequent occurrence. There are issues, both here and there, which need to be tackled. But at the moment, they need money to buy food.

Other parts of Africa, though, don't face such immediate problems. Instead, they need the more long-term kind of development work. Here is the story.

Alcohol is enjoyed all over the world — and it causes problems all over the world, too. Anyone with links to sub-Saharan Africa will know that this is every bit as true in countries like Uganda as anywhere else in the world. Poverty means that the most affordable beer, home-brew or cottage-industrial, poses health risks: sometimes produced in unsanitary conditions, often with unpredictable alcohol content, occasionally even lethal. Cheap, if you don't mind running an armful of risks.

SABMiller, partly encouraged by tax breaks from the Ugandan government, has been stepping into this market. It's clearly not very easy to do, since poor Ugandans are very price-conscious. But SAB developed a way to use sorghum in the production of beer. Using its technique, it has been building breweries in Uganda, taking in Ugandan sorghum and selling Ugandan beer to Ugandans. SAB's plants are offering Ugandans an alternative to the cheap-but-dangerous homebrew they used to drink: cheap-but-safe. In the process, it generates demand for Ugandan crops and provides jobs to Ugandan brewery workers.

Of course SAB turns a profit by doing business in this way. And it's listed in the London and Johannesburg (South African Breweries), so Western investors, who provided the capital, benefit along with Ugandan farmers, who provide the crop, and brewery workers, who provide the labour. Since SAB earns a profit, you'll never hear it lauded in any trendy development rag. But capitalist 'exploitation' is enriching the lives and pockets of Africans. After all, how many charities can you name who have set up breweries in Africa?

Source: Innovation brews in Uganda's beer; FT (video; subscription may be required).

(I own no shares in SABMiller, nor do I currently intend to do so.)